A Business Nightmare in Mexico

HOUSTON (CN) – An oilfield equipment firm claims in court that a competitor destroyed it with bogus copyright charges that corrupt Mexican officials enforced by shutting its factory down and jailing its owner for five months. Campeche, Mexico-based Iner Servicios and its owners Ivette Aguirre-Mendez and Jose Farrera-Redondo sued Submar Inc. of Houma, La., its Mexican affiliate Submarelher, its president, its owner and its attorney, in Federal Court. Iner Servicios says that before its factory was shut down its primary business was manufacturing concrete mud mats. “Mud mats are blanket-like concrete structures consisting of 160 concrete elements interconnected by polypropylene rope,” the complaint states. “They are designed to be flexible so that they can be used to cover an uneven surface, such as a pipeline or uneven shoreline. “Concrete mud mats are often used in the petroleum industry as a foundation for ocean drilling rigs and as a protective covering and stabilizer for underwater pipelines. “Mud mats are also used in shoreline erosion-prevention and other construction and industrial applications in a wide variety of settings.” By 2010, Iner Servicios says, it was the larger provider of flexible concrete mats in Mexico for offshore pipelines, and also had a successful personnel staffing operation for the oil and gas industry. “Most of Iner Servicios’ customers for mud mats were contractors working for the Mexican national oil company Pemex under contracts awarded pursuant to a public bidding process,” the complaint states. Iner Servicios says that while its business prospered, its competitor Submarelher, a partnership between the U.S. concrete fabricating company Submar and the Mexican conglomerate Elher Group, was unsuccessful in its efforts to obtain contracts through the public bidding process. Iner Servicios claims Submar et al. tried to assert patent rights in concrete mud mats by suing another competitor, Grupo Corporativo. “The case was based on an intentional mistranslation of a United States patent issued to Submar,” the complaint states. “Although the patent actually covered only a non-abrasive pad attached to concrete mud mats for certain applications, Submarelher, Submar or another of the defendants fraudulently altered the language in translation in order to claim a patent on the entire mud mat design. “A Mexican court rejected this ploy, found that the alleged patent rights did not exist, and dismissed the case. “After failing to eliminate the competition with false patents Submarelher, Submar, and their co-conspirators turned to artistic copyrights. “This strategy was fraudulent on its face because Mexican copyright law does not protect industrial or commercial designs, areas that are instead the domain of patents. “Nevertheless, beginning in 2008, Submar and Submarelher obtained several Mexican copyright registrations for concrete mud mat designs.” Iner Servicios says two of the sham copyrights were obtained in the name of Submarelher owner Francisco Elizarraras Wignall, and a third was obtained by Thomas Angel, president of Submar. “These copyright registrations are blatant shams. Mexican copyright law protects original works of artistic creativity,” the complaint states. “By their own terms, the copyright certificates issued to Wignall and Angel do not apply to industrial or commercial use of the ideas contained in the work. … “Of course, industrial and commercial uses are the only uses of mud mats genuinely at issue between these parties. “Mexican news reports have flatly stated that the copyrights are improper and were obtained through a conspiracy between the defendants and the powerful Elher Group exercising undue influence over corrupt governmental officials, many of whom have been recently dismissed on charges of corruption. “According to these news reports, the certificates were even issued the same day that the application was filed despite a legal requirement that there be a fifteen day waiting period.” Inter Servicios adds: “In Mexico, patents are enforced only through fines and civil litigation claims. “But copyright infringement is a crime punishable by imprisonment. The defendants took full advantage of the harsh copyright enforcement measures by enlisting corrupt government officials to prosecute unjustified criminal cases against the defendants’ competitors.” Iner Servicios says a corrupt prosecutor, Veronica Quintanar Vazquez, helped Submar et al. carry out their scheme by authorizing the seizure of its factory and the arrest of its owner. Quintanar is not named as a defendant. “On September 10, 2010, Submarelher notified a Mexican governmental investigative agency of its claim that Iner Servicios was infringing the claimed copyrights,” the complaint states. “On October 27, 2010, over one hundred Mexican federal police officers stormed the Iner Servicios fabrication facility, seized all of the property, ejected the employees, and shut down operations. “At no time prior to the seizure of Iner Servicios’ fabrication facility on October 27, 2010, did Submar, Submarelher, or their representatives ever contact Iner Servicios, whether in person, by phone, fax, letter or e-mail.” “Since the seizure, the Iner Servicios yard has been in the custody of law enforcement and the owners of the property have been prohibited from entering or removing any property from the premises. “Iner Servicios has not been able to produce or sell goods since. In addition to losing its sales of flexible concrete mats, Iner Servicios has been forced to close its successful outsourcing business.” Iner Servicios owner Jose Farrera-Redondo claims he had no idea why the company’s factory was raided and shut. He says he eventually learned that he and his co-owner Ivette Aguirre-Mendez were named as defendants in a federal criminal copyright infringement action brought by Submar et al. in Campeche. “In conjunction with this litigation, the judge issued arrest warrants for both Redondo and Aguirre-Mendez, but, on October 30, 2010, a second judge in Campeche refused to enforce the warrants, finding no evidence of a violation,” the complaint states. Farrera-Rendono says his life was turned upside down on April 5, 2011, when he flew to the United States to see a doctor in Houston for follow-up treatment after the removal of a tumor from his leg in Mexico. “He landed at the Houston airport but was denied admission to the United States apparently because of the charges against him in the defendants’ copyright case,” the complaint states. “His visa was canceled and he was placed in an immigration holding area for hours with no explanation. “Eventually, he was deported back to Monterrey, Mexico, on crutches and with a bandaged leg, without being allowed to see his doctor and told that he could not return to the United States until his legal problems in Mexico were resolved. “When Farrera-Redondo arrived in Monterrey his ordeal turned into a true nightmare. “He was met at the airport by Mexican federal agents with a new warrant for his arrest on charges of criminal copyright infringement. “He was placed in a jail in Escobedo, just outside the city of Monterrey. The same night, many members of a major drug cartel had been arrested and were being held in the same jail. “Suffering from the pain in his leg, and overwhelmed by confusion and fear at what was happening to him, Farrera-Redondo lay awake in his cell all night as the sounds of the drug cartel members being beaten and tortured rang through the jail house. “The next morning, April 6, 2011, Farrera-Redondo was flown to Mexico City and then on to Campeche where he was incarcerated in Koben prison, where he was held without bail because of the supposed seriousness of the offense. “Once the possibility of Farrera-Redondo’s long-term imprisonment became a genuine threat, the defendants disclosed their extortionist goals by demanding that Farrera-Redondo agree to pay them 30 percent royalties for all mud mat sales and also pay $1.6 million for their supposed ‘legal fees.’ “In exchange, the defendants offered to arrange for the judge to give Farrera-Redondo a sentence at the low end of the range for copyright infringement, which would have limited his prison time to three years. “In addition to the unjustified payments, this would have required Farrera-Redondo to plead guilty to a crime that he did not commit. “He rejected the defendants’ proposal.” Farrera-Redondo says he was jailed until Sept. 30, 2011 when a new judge found incarceration was not authorized for the charges filed against him. “The five months Redondo spent in Koben prison were the worst of his life,” the complaint states. “He suffered tremendous humiliation when his high-school and college-age children had to visit their father in prison. “Plans for family vacations were canceled so that relatives would be able to visit Redondo while he remained incarcerated. “Farrera-Redondo had to miss the graduation ceremony for his youngest daughter, Paulina, who finished her studies at a school in Dublin, Ireland that spring.” Iner Servicios’ other owner, Ivette Aguirre-Mendez, a U.S. citizen who lives in Houston, claims the bogus charges kept her from visiting her ailing father in Mexico. “Worse, Aguirre-Mendez’s uncertainty about her own fate and the fate of her business was overwhelming,” the complaint states. “Fear that she might even be arrested in the United States and extradited to Mexico to face bogus charges, and that her children might lose their mother to these charges, dominated her thoughts and destroyed her ability to live a normal life. “Aguirre-Mendez lived in this state of constant anxiety and fear for over a year. “The defendants actively pursued the criminal charges against her until June 2012, when a new judge in Mexico reviewing the case threw out all of the charges, finding that they were utterly unsupported by the record and the law.” Aguirre-Mendez and Farrera-Redondo say Submar et al. were “motivated by simple greed” to destroy their business. “The defendants apparently had had minimal success in obtaining contracts through the mandatory public bid process,” the complaint states. “Now that the Mexican company has aggressively if illegally asserted an unjustified intellectual property monopoly, it is able to obtain contracts on a no-bid basis. “This apparently has generated business for the defendants valued at least in the hundreds of millions of pesos. And the corresponding harm done to the plaintiffs, both financially and emotionally, has been absolutely devastating.” Aguirre-Mendez and Farrera-Redondo claim that on April 14, 2011, in a blatant acknowledgement of the scheme “Submarelher took out a full-page newspaper advertisement in a major Mexican newspaper, La Reforma, congratulating and thanking two government officials for their assistance in defending Submarelher’s claimed copyrights. “Both officials were dismissed from their positions based on allegations of corruption,” the complaint states. Aguirre-Mendez and Farrera-Redondo seek damages for conspiracy, malicious prosecution, intentional infliction of emotional distress, tortious interference and unjust enrichment. They are represented by Robert Rivera Jr., with Susman Godfrey in Houston.